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Dienstag, 4. Juni 2013

$83.5M Suit Says Willis Group Aided Stanford Fraud

By Law360

A group of holders of Stanford Financial Group CD accounts
claims that Willis Group Holdings Public Limited Co. helped
perpetuate Robert Allen Stanford's $7 billion Ponzi scheme,
according to an $83.5 million class action removed from
Florida state court Monday.

The plaintiffs, 64 citizens of El Salvador, Nicaragua,
Panama, the United States and Spain who claim combined losses
of more than $83.5 million, say that when they made their
investments in Stanford Financial CDs, they relied on "safety
and soundness" letters issued by Willis asserting that
Stanford International Bank and its products were protected by
certain insurance policies and were highly liquid.

"In fact, the Stanford Financial CDs were not CDs at all, but
unregistered, unregulated securities sold illegally from
Stanford Financial's home base in the United States," the
plaintiffs say in their complaint. "These investments had no
insurance and were fraught with risk."

The case is not the first to lay such accusations against
Willis. In 2009, a class of between 1,200 and 5,000 Venezuelan
clients sought $1.6 billion over claims they were allegedly
lured into the scheme by the insurance brokers' assurance
that Stanford CDs were sound, insured investments. And in
another suit that year, Mexican investors implicated Willis,
claiming the defendants contributed to a fraud that cost them
roughly $1 billion.

Stanford was sentenced in June 2012 to 110 years in prison
after being convicted on charges he misappropriated billions
of dollars in investor funds, including some $1.6 billion he
allegedly moved to a personal account. His $7 billion Ponzi
scheme was second only to Bernie Madoff's record-setting
scam.

From about August 2004 through 2008, Willis provided Stanford
Financial with an undated form letter that said Willis was
the insurance broker for Stanford International Bank and had
placed directors and officers liability insurance and a
bankers blanket bond with Lloyds of London, according to the
current complaint.

The letters played a crucial role in Stanford's fraud because
Stanford Finanical was an offshore bank and thus not insured
by the Federal Deposit Insurance Corp. Willis' letters helped
Stanford get around that obstacle by claiming the CDs "were
even safer than U.S. Bank-issued CDs because of the unique
insurance policies Willis had obtained," the complaint says.

"The Willis letters were specifically designed to win
investors' trust and confidence in Stanford Financial's fraudulent
scheme," the plaintiffs say in their complaint, noting that
for investors with more than $1 million in their accounts,
Stanford Financial advisors could get personally addressed
letters from Willis.

"Willis' message to potential investors was this: Trust us, you can invest with confidence and security in Stanford
Financial CDs," they add.

All of the plaintiffs in the current case made their purchases through Stanford Financial's Miami office, which the
complaint says accounted for more than $1 billion in CD sales.

Willis of Colorado Inc. filed the notice of removal of the
class action on the grounds of diversity between plaintiffs
and defendants, of the Securities Litigation Uniform
Standards Act of 1998 and that the Northern District of Texas has
exclusive jurisdiction in Stanford receivership cases.

The notice of removal also claims that defendants Willis
Group Holdings Public Limited Co. and Willis Ltd., which are
based in Ireland and the United Kingdom, respectively, have
been fraudulently joined in an effort to defeat diversity
jurisdiction. It says that the plaintiffs' claims are on
letters issued only by the subsidiary Willis of Colorado and
"no reasonable possibility" exists of the plaintiffs
recovering damages from the other entities.

Counsel for both sides could not be reached for comment late Tuesday.

The plaintiffs are represented by Luis Delgado and
Christopher King of Homer & Bonner PA and Ervin Gonzalez of Colson
Hicks Eidson PA.

Willis is represented by Edward Soto of Weil Gotshal & Manges LLP.

The case is Nuila de Gadala-Maria et al. v. Willis Group
Holdings Public Limited Co., case number 1:13-cv-21989, in the
U.S. District Court for the Southern District of Florida.